Malloy Reaches Deal With Unions: Concessions, But No Layoffs For 4 Years

No Job Guarantees For Managers, New Employees After July 1

Christopher Keating

May 14, 2011

Capping months of secretive talks, Gov. Dannel P. Malloy and state-employee union leaders reached a deal Friday to save $1.6 billion over the next two years in exchange for a promise not to lay off unionized workers for the next four years.

Malloy came up short of his goal of $2 billion in concessions and savings over two years, but the $400 million shortfall would be covered by spending cuts and better-than-expected tax collections.

Malloy, his staff, and the unions all declined to provide details until the unionized workers are notified of the deal — a process that will last into next week. But several sources confirmed the outlines of the deal to The Courant.

While the provisions are tentative, sources said the deal is a four-year, no-layoff agreement.

In exchange, there would be a hard wage freeze for two years for all unionized employees. It would include all forms of payments, including wages, longevity pay, increments and lump sums. Newly hired state employees would no longer be eligible for longevity pay, which are twice-yearly payments on top of their normal pay.

After freezes for two years, the unions would receive 3 percent pay increases on the first day of the new fiscal year — July 1 — in 2013, 2014 and 2015, according to sources.

The deal does not include any unpaid furlough days, which have become common as a cost-saving measure in recent years and have allowed Thanksgiving and Christmas to become four-day weekends for state employees.

Malloy's agreement also calls for a five-year extension in an agreement with the State Employee Bargain Agent Coalition, known as SEBAC, that was scheduled to end in 2017. However, there would be some unspecified changes in the deal, which was originally signed by Gov. John G. Rowland and ratified by the legislature.

The deal announced Friday means that Malloy will not need to lay off 4,742 workers who were expected to lose their jobs if the talks fell apart.

The budget battle is a long way from over. The deal must be approved by 15 unions and 34 bargaining units in the coming weeks. After that, it must be approved by the state legislature.

Deal Signed At 2 P.M.

Friday afternoon's announcement came after furious days of negotiations that lasted until 3 a.m. Friday and then resumed later that morning. The deal was finally signed at 2 p.m., and Malloy held a hastily arranged press conference at 3 p.m.

Rumors of a deal had been flying around the Capitol for days, leading to a series of false alarms as legislators, staff members and reporters scrambled for information on the latest developments.

To hail the agreement, the top four Democrats in the legislature surrounded Malloy in a high-ceilinged function room on the Capitol's third floor.

Downstairs, Republican lawmakers questioned the deal. State Republican Chairman Christopher Healy said in a statement that the deal "is insulting to anyone who can add two plus two'' and is a giveaway to the unions by a Democratic governor.

"The budget charade continues despite claims by Gov. Malloy and the public-sector unions that they have agreed upon $1.6 billion in wage, pension, and work condition concessions,'' Healy said. "There are no serious cuts in the size of the workforce, just trimming around the edges and putting off the inevitable — more taxes to cover an unconstitutional budget that punishes success and fails to address the unsustainable burdens of current operating costs and long-term debt."

"The Democrats own this mess and rather than take action, they have walked away from the problem. The only path for recovery, economic growth and opportunity is smaller government and less taxes. Gov. Malloy and the Democrats are sucking almost $2 billion out of the private economy, raising taxes on business and individuals, meddling in the affairs of small business and getting nothing of substance from state employees,'' Healy said.

House GOP leader Lawrence Cafero of Norwalk said it seems that the state employees got the upper hand in the negotiations.

"It's not like we're looking for everybody to bleed a little bit, but just from what I understand now, if you were to measure who got the better of this deal, I'm sure that the state employee union feels that they do — that they got the better of the deal," Cafero said.

Cafero noted that there are no furlough days and a guarantee of no layoffs for four years, regardless of economic conditions, for unionized employees.

"No one loses their job. No one loses a nickel of pay," Cafero said. " And ... we're bound the next four years with ... a no-economic-layoff [provision]. ... That means regardless of what happens to the world economy, by this agreement, we are bound to keep the exact same number — 54,000 full-time employees — as we do right now. That could be troublesome."

$1.6 Billion Over 2 Years

Occhiogrosso rejected Cafero's statement, saying that nonunion employees can be laid off and that there will be fewer than 54,000 full-time employees as the years progress. Nonunion managers will be laid off as part of a broader plan to streamline and downsize government. For example, 100 state employees are expected to be laid off as part of consolidation plans that have been approved by the legislature.

Malloy repeatedly called for $2 billion in concessions, but he says the deal actually reached would save $1.6 billion over two years. The savings are expected to be $700 million in the first year and $900 million in the second year.

Senate GOP Leader John McKinney of Fairfield said that Republican leaders haven't been given many details, but that there are "two major areas of concern" from what he was told by Malloy's budget director, Ben Barnes.

One, he said, is that the state's agreement with the union's bargaining coalition on pensions and health benefits would be extended by five years through 2022 — binding future legislators and governors to the same conditions that are straining the state budget now.

The other, McKinney said, is the no-layoff pledge for four years, which gives the legislature and the governor "no way to downsize or right-size government" regardless of whether "our economy deteriorates further."

Malloy and his staff said that the deal would save $21.5 billion over the next 20 years — long after he is no longer governor. But they declined to provide any details on how the savings would be reached.

Democrats had smiles on their faces Friday at the Capitol, but they did not reveal details of the package.

House Speaker Chris Donovan of Meriden, who stood near Malloy during Friday's announcement, said: "I am pleased to hear that Gov. Malloy and representatives of the state employee unions have reached a tentative agreement. We counted on an agreement in the budget we passed just over a week ago, and once again it appears that our state employees are willing to help out in a crisis. … To move Connecticut forward, we knew that everyone in the state would have to contribute. In avoiding massive layoffs that would hurt our state, and by working together, we are stronger and Connecticut can prosper.''

The union deal will also prevent the need for "Plan B,'' which was a series of options for $1.2 billion in additional cuts that could have meant $482 million in cuts for cities and towns.

"This outcome should ensure that the municipal aid and revenue sharing contained in the adopted state budget remain in place,'' said Jim Finley, the CEO and chief lobbyist for the Connecticut Conference of Municipalities. "This will provide much-needed budget certainty at the local level.''

Details Still To Come

Democrats learned first of the agreement, and then Republican leaders received a phone call at 2 p.m. from Barnes and Malloy's chief of staff, Timothy Bannon.

Cafero noted that Malloy had frequently complained about the fact that Rowland had committed the state to a 20-year deal with state workers back in 1997. Malloy "was always very resentful about how previous governors had locked the state into various agreements and he has now just extended that agreement for another five years,'' Cafero said.

McKinney was asked if the package would satisfy the public's notion that state employees need to share in the pain.

"I don't think the public wants pain,'' he said. "It's not about pain. It's not about demonizing state employees. It's about trying to do what's right for 3.2 million people in the state of Connecticut, including 45,000 state employees."

"Having a government tomorrow that's the same size as the government today is not going to get our economy moving,'' McKinney added. "Our state government is, in our opinion, too big and too inefficient and too costly to move our economy."

One longtime state employee was stunned that the plan does not include any furlough days. The employee had not heard anything yet about any changes in the co-payments for prescription drugs and doctor visits.

Matt O'Connor, a spokesman for the unions, said he could not comment on the details of the deal, including any possible changes in the co-pays.

While Republicans hammered the deal, Democrats were far more sympathetic.

"The governor gets an A-plus,'' said Rep. Stephen Dargan, a moderate Democrat who is the longest-serving committee chairman in the House. "I think he's shown true leadership. It's kind of a happy day on Friday the 13th.''

At the end of his prepared remarks in announcing the deal, Malloy's speech said, "Finally ... so much for Friday the 13th being an unlucky day!''